Charitable tax deduction wins key bipartisan Senate support

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Laura Blank

WASHINGTON, D.C. (November 22, 2013) — The charitable deduction won strong bipartisan support today from key Senate leaders as more than 200 frontline representatives from the nonprofit and charitable sectors gathered in Washington, D.C. to warn that any limitations to the charitable tax deduction would have cascading consequences.

Sens. John Thune (R-SD) and Ron Wyden (D-OR) — both members of the Senate Finance Committee that oversees tax policy — sent a letter to Sens. Max Baucus (D-MT) and Orrin Hatch (R-UT), chair and ranking member of the committee, urging them to protect the current charitable deduction. As lawmakers head into an intense period of debate over tax reform and deficit reduction, the letter underscores growing bipartisan congressional support for the nearly 100-year-old tax incentive that encourages charitable giving. The letter is being circulated for additional signatures from other members.

“We write to you to underscore the importance of protecting the full value and scope of the charitable deduction during a comprehensive rewrite of the tax code,” Sens. Thune and Wyden said in the letter. “Analysis has repeatedly shown that proposals to cut, cap, or limit the charitable deduction could cause charitable donations to decline by billions of dollars annually. Worse yet, weakening the charitable deduction would most hurt the adults and children who receive vital charitable services from organizations like soup kitchens, after-school programs, and medical research projects, just to name a few.

“In many cases, the government would be required to step in and fund those services now being provided through private generosity,” the letter continued. “Accordingly, preserving the charitable deduction is also prudent as a matter of broader fiscal policy. We believe the federal government must affirm its long-standing dedication to encouraging private acts of charity and compassion, especially when our charities and the people they serve are facing so many challenges.”

The coalition is encouraged by the senators’ emphasis on the fact that the charitable deduction is not about the donors, but what donors’ dollars do to support worthy causes in America’s communities. The statement of support represents an important reframing of the issue to reflect the value and impact of the charitable deduction outside the beltway.

“America has a remarkable tradition of giving back. It is a reflection of our society’s values”, said Father Larry Snyder, president of Catholic Charities USA. “Our communities need policies that help encourage charitable giving, not discourage support of our neighbors in need.”

Members of the Charitable Giving Coalition — a group of more than 60 nonprofits, foundations and other charitable organizations serving every state in the country — met with nearly 150 congressional offices throughout the day to share their perspectives about the role and impact of the charitable sector in communities every day.

“We applaud Senators Thune and Wyden for their recognition of the central role of private charitable giving in strengthening our civil society and for their willingness to be catalysts for public, bipartisan support for the charitable deduction,” said Adam Meyerson, president of The Philanthropy Roundtable.

The Coalition represents a growing chorus of people from throughout America delivering a clear message to lawmakers – “I am the charitable deduction” – to make sure they understand the inextricable link between charitable giving and thriving communities, in part through a new Protect Giving YouTube channel and petition drive. Charity and foundation leaders are also sharing with lawmakers an infographic illustrating the ripple effects of the charitable sector throughout communities.

While today’s action by Thune and Wyden is an important milestone, the fight to protect the charitable deduction is far from over as federal lawmakers search for revenue in the tax reform process. It is essential that they clearly understand the negative consequences of any changes to the charitable deduction, Coalition members told lawmakers. ­Any limits on the charitable deduction would have devastating impacts on giving and communities. When giving goes down, jobs are lost, disease research stymied, economic development stunted, support services for the most vulnerable eliminated, and education, arts and recreation opportunities diminished, they said.

“Limiting the value of the charitable deduction would hobble the capacity of charities to provide assistance to families and individuals in need,” said Stacy D. Stewart, U.S. president of United Way Worldwide. “Reductions in charitable services would come as federal and state governments continue to cut funding for social programs, and would amount to a double hit to children and families in need.”

“Government cutbacks are already hurting our nation’s most vulnerable communities. To couple them with a reduction in charitable funding would be devastating,” said Vikki Spruill, president and CEO of the Council on Foundations.

At a congressional staff lunch briefing with Coalition leaders and tax policy experts, new research was shared from an upcoming report about the recession’s impact on charitable giving and the potential impact of limits to the charitable deduction. Arthur Brooks, Ph.D, president of the American Enterprise Institute, said that charitable giving stands at pre-recession levels and may not grow again strongly for several years. Also, the proposed 28 percent cap on the charitable deduction could cause giving to decline by nearly $10 billion in the first year.

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About The Charitable Giving Coalition:
Representing private and community foundations, their grantees and independent charities, the Charitable Giving Coalition’s members include United Way Worldwide, the Salvation Army, Catholic Charities USA, the American Council on Education, Jewish Federations of North America, the American Institute for Cancer Research, the Association of Fundraising Professionals, Independent Sector, the Council on Foundations, and The Philanthropy Roundtable, among others. Formed in 2009, the coalition is a broad cross-section of nonprofit organizations across the country, including both the nonprofit organizations themselves and the associations and umbrella groups that serve their needs. The coalition is dedicated to preserving the charitable giving incentive that ensures that our nation's charities receive the funds necessary to fulfill their essential philanthropic missions. The coalition provides a unique and unified voice on Capitol Hill on issues affecting the charitable deduction, a voice composed of both direct lobbying and robust grassroots advocacy. www.ProtectGiving.org, #ProtectGiving, @ProtectGiving.

About World Vision:
World Vision is a Christian relief, development, and advocacy organization dedicated to working with children, families, and their communities worldwide to reach their full potential by tackling the causes of poverty and injustice. For more information, visit www.WorldVision.org/press or follow us on Twitter @WorldVisionNews.

Highlights

"I was proud to join the Charitable Giving Coalition on Capitol Hill Wednesday to make the case that we must protect the centuries-old practice of charitable tax deductions. This is particularly critical around the holiday season, as donors often seek to make last-minute year-end or holiday gifts to their favorite charities."

"The proposals to limit this deduction would have devastating impacts on American charities, potentially reducing charitable giving in this country by as much as 11 billion dollars. The charitable deduction provides a financial lifeline for people in need; it's not a tax loophole to be eliminated."